Back to top

Image: Bigstock

Stock Market News for Sep 26, 2023

Read MoreHide Full Article

U.S. stock markets closed higher on Monday to start the last week of a highly volatile September. Notably, September is historically known as the worst-performing month on Wall Street and this year the trend continued too. Despite positive closing, market participants remained concerned regarding soaring yields on U.S. government bonds and possibility of a U.S. government shutdown. All three major stock indexes terminated a four-day losing streak.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was up 0.1% to close at 34,006.88 after a choppy session. Notably, 16 components of the 30-stock index ended in positive territory, while 14 ended in negative territory. At its intraday low, the blue-chip index was down more than 183 points.

The tech-heavy Nasdaq Composite finished at 13,271.32, gaining 0.5% due to strong performance of large-cap technology stocks. At its intraday low, the tech-laden index was down nearly 66 points.

The major gainer of the index was GE HealthCare Technologies Inc. (GEHC - Free Report) . Shares of the medical info systems giant surged 3.3%. GE HealthCare currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 increased 0.4% to end at 4,337.44. The broad-market index fell below the key support base of 100-day moving average on Sep 21 for the first time since March and continued to trade there. This indicates possibility of more decline for the index.

Eight out of 11 broad sectors of the benchmark ended in positive territory, while three finished in red. The Consumer Discretionary Select Sector SPDR (XLY), the Materials Select Sector SPDR (XLB), the Energy Select Sector SPDR (XLE) and the Health Care Select Sector SPDR (XLV) rose 0.6%, 0.8%, 1.3% and 0.6%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was down 1.7% to 16.9. A total of 9.1 billion shares were traded on Monday, lower than the last 20-session average of 10 billion. Decliners outnumbered advancers on the NYSE by a 1.2-to-1 ratio. On Nasdaq, a 1.1-to-1 ratio favored declining issues.

Soaring Yields on Sovereign Bonds

Although the Fed paused its rate hike in the September FOMC meeting, the current dot-plot has shown a strong likelihood of one more hike of 25 basis points in 2023. That will take the terminal interest rate of this hiking cycle to 5.6%, well above the 5.1% forecast in June. Notably, the current range of the Fed fund rate is the highest level since March 2001.

More importantly, the central bank said it would keep interest rates higher for a longer time period. The new projection has shown two maximum rate cuts in 2024 instead of four projected in June. The first cut in interest rate is not expected before September 2024.

Following the post-FOMC statement of Jerome Powell, the yield on the short-term 2-Year U.S. Treasury Note reached 5.461%, its highest level since 2006. This link is closely linked to the possibility of a near-term economic downturn. The yield on the benchmark 10-Year U.S. Treasury Note touched 4.542%, its highest level since 2007. This link is closely linked to mortgage rate.

Fears of a Government Shutdown

On Jun 21, Republican members of the House of Representatives sent the chamber into recess raising fears of a government shutdown. The House failed to agree on measures to set the rule for debate on a Pentagon funding bill. The bill was set for final voting on the floor of the House. Economists are concerned that a government shutdown will adversely impact the U.S. GDP growth rate in fourth-quarter 2023.

Moody’s Investor Service has warned that a U.S. government shutdown will be credit negative for the nation. The rating agency has currently assigned a AAA stable rating for United States. On Aug 1, Fitch Ratings downgraded the U.S long-term foreign currency issuer default rating to AA+ from AAA. The agency cited “expected fiscal deterioration over the next three years.”


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


GE HealthCare Technologies Inc. (GEHC) - free report >>

Published in